Is your health insurance premium going up?
Recently I received a call from a lady asking about health insurance. She currently has a policy through one of the major health insurers, and has received (another) notice of a price increase. Her premiums are going up $160 a month. Five years ago her cost was less than $250 a month. Now, it's over $700. "What can I do," she asked?
When I met with her, she unleashed her fury over the insurance company. "Aren't these companies accountable to anyone," she asked? "They just don't care about us at all! How much higher do you think they'll go?"
After considering her question, I answered her that, "in my opinion, in a couple of years you won't be able to get health insurance at all." She seemed surprised by this. She shouldn't be.
Blue Cross Blue Shield, United Healthcare, and Humana have all announced big cutbacks in their offerings of health insurance. They are paying their sales force pennies on a sale in an effort to discourage them from selling the stuff. When is the last time you heard of a major company discouraging their sales people from pushing the product that made them the company they are? A recent Wall Street Journal article declared that the health insurers are losing about 17 cents on every dollar of health insurance they sell.
How could this happen?
Imagine that your wife or husband just passed away. You decide that you'd like to have some cash, and so you take out a million dollar life insurance policy on the deceased. Of course you know that's ridiculous. After all, your spouse is dead. He or she has what insurers call a pre-existing condition, in this case death. Common sense tells you that any insurance company that would offer a life insurance policy on someone who was already dead would soon go out of business. You cannot buy flood insurance after the hurricane watch goes up for the same reason.
Yet, that's what the health insurers are being required to do. The Affordable Care Act no longer allows insurers to use the hundred years worth of actuarial data they have accumulated to determine how to price a policy, nor can they turn you down for pre-existing conditions. Not for a cold. Not for cancer. No matter how sick you are, you must be granted coverage.
That sounds good from a warm and fuzzy political candidate point of view. But for a functioning health insurance company, it's a recipe for disaster.